The New York-based firm, founded in 1990 by Ranjan Tandon, has struggled recently. It posted losses in 2011 and is down this year, a person familiar with Libra said. The person said Libra will return investors’ money by year end and eventually become a family office.

In a Nov. 9 letter to investors, Mr. Tandon said that new regulations and expected tax increases also factored in his decision to return clients’ money. Complying with a raft of new rules and trading restrictions stemming from the Dodd-Frank financial legislation, he wrote, “will take time away from what I enjoy most, investing.”

Libra, which trades stocks, currencies and commodities, plans to waive its management fee for investors who have lost money as of Dec. 31, the letter said.

“After due reflection, I have decided to retire from managing client funds and will redeem all external capital,” Mr. Tandon wrote. “I regret any losses that you have incurred, especially losses borne by investors that began investing with Libra more recently.”